The Impact of the Processing and Foreign Trade of Agricultural Products on Agricultural Modernization: An Empirical Analysis Based on Cointegration and VEC Model

Based on the data related to the Chinese and world agricultural production and trade from 1986 to 2011, this paper uses the principal component analysis, cointegration and vector error correction model to perform the empirical analysis of the impact of processing, import and export of agricultural products on the agricultural modernization in China. The results show that the processing and export of agricultural products play a role in promoting the agricultural modernization in China, while the import of agricultural products has some negative effects on the agricultural modernization in China. The negative effects of the import of agricultural products are from the limitations of farmers' small-scale operation and foreign trading partners' protectionism. China should further develop the processing industry of agricultural products, and strengthen the role of downstream industries in promoting the agricultural modernization; improve the level of large-scale and intensive operation, and make good use of WTO rules, in order to provide the necessary market conditions for the agricultural modernization.